Question

Pharoah Company purchased for $4.5430 million a mine that is estimated to have 45.43 million tons of ore and no salvage value. In the first year, 14.04 million tons of ore are extracted.

Calculate depletion cost per unit. (Round answer to 2 decimal places, e.g. 0.50.)

Depletion cost per unit

$enter Depletion cost per unit in dollars rounded to 2 decimal places  per ton

eTextbook and Media

List of Accounts

  

  

Prepare the journal entry to record depletion for the first year. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount

eTextbook and Media

List of Accounts

  

  

Show how this mine is reported on the balance sheet at the end of the first year.

Pharoah Company Balance Sheet (Partial)
enter a balance sheet item		$enter a dollar amount
select between addition and deduction                                                                      AddLess: enter a balance sheet item		enter a dollar amount		$enter a subtotal of the two previous amounts

Answer 1

Depletion Cost per unit = $4.5430 / 45.43 = $0.10 per unit

Account Titles	Debit	Credit
Depletion Expense	$ 1.4040
Accumulated Depletion		$ 1.4040

*Amount in millions

Balance Sheet (Partial)
Property, Plant and Equipment
Mine	$          4.5430
Less Accumulated Depletion	$          1.4040	$          3.1390